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SMM Daily Review – 2012/5/17 Base Metals Market
May 18,2012 10:39CST
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As LME copper remained feeble overnight, SHFE 1208 copper contract opened RMB 130/mt down at RMB 55,120/mt Thursday.

SHANGHAI, May 18 (SMM) --

As LME copper remained feeble overnight, SHFE 1208 copper contract opened RMB 130/mt down at RMB 55,120/mt Thursday. As the Shanghai Composite Index surged by 1.5%, and as LME copper prices rallied to around USD 7,800/mt, SHFE 1208 copper contract increased after testing RMB 55,000/mt temporarily and sliding to RMB 54,920/mt, and expanded the daily gains in the afternoon. SHFE 1208 copper contract soared to a high at RMB 55,770/mt and finally ended at RMB 55,730/mt, up RMB 470/mt or 0.85%. SHFE 1209 copper contract started at RMB 54,900/mt, touching a low at RMB 54,650/mt and a high at RMB 55,510/mt before finally settling at RMB 55,420/mt, up RMB 410/mt or 0.75%. Positions and trading volumes for SHFE 1208 copper contract decreased by 40,924 lots and 114,000 lots, respectively, while those for SHFE 1209 copper contract added by 20,640 lots and 102,000 lots, respectively. SHFE 1209 copper contract became the most active copper contract before the midday. SHFE copper prices made corrections following significant drops, but long investors kept cautious toward operation and short investors still imposed great pressures at around RMB 55,500/mt. In this context, SHFE copper prices will remain weak for the foreseeable future.

SHFE copper prices rallied from the previous lows. Cargo-holders in spot markets became unwilling to move goods at the lows, helping spot copper premium quotes rise sharply to positive RMB 180-250/mt in Shanghai in the morning business. Traded prices for standard-quality copper were between RMB 55,700-55,900/mt, and RMB 55,750-55,970/mt for high-quality copper. Downstream producers bought aggressively at prices below RMB 56,000/mt, but chose to stand on the sidelines after copper prices climbed rapidly near the midday. In this context, spot copper premiums also inched down in the morning session, and market transactions were also restricted. In the afternoon business, SHFE copper prices expanded gains, so spot copper premiums slid further, with quotes for high-quality copper reported at around positive RMB 200/mt. Traded prices rose to RMB 56,150-56,300/mt in the afternoon, but downstream producer buying interest cooled.

The most active SHFE aluminum contract for August delivery opened at RMB 15,970/mt and closed up RMB 140/mt or 0.88% at RMB 16,040/mt, as a rebound in the Shanghai Composite Index helped it end the nearly two-week losing streak. Positions dropped 5,560 lots to 92,338 lots and transacted contracts lost 1,908 lots to 12,118 lots. Resistance at the 10-dat moving average has yet to be tested after its breakthrough of the 5-day moving average.

Spot aluminum traded at RMB 15,960-15,990/mt in Shanghai, at discounts of RMB 10-40/mt over the current-month aluminum price. The trading range in Wuxi is RMB 15,990-16,010/mt and is RMB 15,980-16,000/mt in Hangzhou. Some goods held quotations firm, but as the traded volume dropped due to the prevailing bearish sentiment downstream, spot prices also slipped.

SHFE lead prices fell to move between RMB 15,250-15,300/mt Thursday after opening at RMB 15,335/mt. In the afternoon, SHFE lead prices regained earlier losses and moved between RMB 15,320-15,360/mt to finally close at RMB 15,300/mt, up RMB 45/mt. Trading volumes were up 94 lots to 270 lots, and positions increased by 86 lots to 1,174 lots.

Quotations for well-known brands including Chihong Zn & Ge and Nanfang moved down to between RMB 15,280-15,300/mt, with premiums of RMB 0-10/mt over the most active SHFE lead contract price. Tongguan and Shuangyan were quoted between RMB 15,240-15,250/mt. Offers for lead from Gejiu region were at rarely reported. In the afternoon, quotations for branded lead rose to RMB 15,350/mt, but fell to RMB 15,320/mt later. Dealers were cautious moving goods as lead prices were lower than their floor prices and since market expected prices to rebound. Trading was still modest.

On Thursday, SHFE three-month zinc contract prices opened at RMB 14,945/mt and dipped below the moving average to an intraday low RMB 14,870/mt. As the Shanghai Composite Index surged and due to rebounding SHFE copper prices, SHFE three-month zinc contract prices rallied and finally closed at RMB 14,975/mt, up RMB 5/mt or 0.03%. Trading volumes decreased by 8,858 lots to 112,424 lots, and total position decreased by 4,670 lots to 168,020 lots.
In domestic spot markets, discounts of #0 zinc against SHFE three-month zinc contract prices were around RMB 60/mt, with traded prices between RMB 14,840-14,860/mt. #1 zinc prices were around RMB 14,830/mt. Downstream buying interest did not improve, while some traders were awaiting delivery, leaving the overall transactions quiet.

In Shanghai tin market, transactions were modest in the morning Thursday. Mainstream traded prices for Nanshan, Yunxiang and Yunshan were between RMB 153,500-154,000/mt, while most transactions for Yunheng and Yunxi were concluded between RMB 154,000-156,500/mt. In the afternoon, as LME tin prices fluctuated up, boosting confidence in spot market. Dealers were more willing to replenish stocks and low-end prices were driven up. Selling interest among smelters remained low due to high cost. Market players expected more news.

On Thursday, mainstream traded prices of Jinchuan nickel were between RMB 126,500-126,700/mt in the morning session, while mainstream Russian nickel prices were between RMB 124,400-124,600/mt. A wait-and-see sentiment grew in the market as LME nickel prices hit record lows, with traders and downstream buyers cautious.








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